Item 5. Fees and Compensation
Separate Account Fees:
We provide investment advisory separate account services for a fee. This fee is typically
charged as a percentage of your assets under our management. While this fee is typically
expressed as an annual percentage, it is calculated based on the average daily, month-end, or
quarter-end net assets, and generally invoiced on a monthly or quarterly basis in arrears.
Your investment advisory agreement will typically provide that you will incur fees and expenses
in addition to our advisory fees such as custody, brokerage and other transaction costs,
administrative and other expenses. Examples of other costs and expenses typically include
mark-ups, mark-downs and other amounts included in the price of a security, odd-lot
differentials, broker commissions, transfer taxes, wire transfer fees and electronic fund fees.
Please review your investment advisory agreement for further information on how we charge and
collect fees. Please see Item 12 of this brochure for more information on our brokerage
practices.
We reserve the right, in our sole discretion, to negotiate or modify (either up or down) the
advisory fees applicable to any client due to a variety of factors, including but not limited to: the
level of reporting and administrative operations required to service an account, the investment
strategy or style, the number of portfolios or accounts involved, and/or the number and types of
services provided to the client. Because our fees are negotiable, the actual fee paid by any client
or group of clients may be different.
The Firm exercises a discretion to charge a minimum annual fee for the investment advisory
services it provides for separately managed accounts. Minimum annual fees are to be negotiated
with clients and therefore, may vary.
Pooled Investment Vehicle Fees:
Fees on pooled investment vehicles are typically charged a base management fee as a percentage
of the fund’s net asset value or, for a private fund, an investor’s capital account balance. Fees
are generally accrued as of each business day and are charged to the fund or investor quarterly or
monthly in arrears. Funds may also be subject to additional charges such as custody, brokerage
and other transaction costs, administrative and other expenses. Fees are not generally negotiable,
though they may be waived or deferred at the discretion of the fund in accordance with the
fund’s offering materials. Such waivers and deferrals will cause some clients or groups of clients
to pay fees that are different from the basic fee schedules disclosed in fund offering materials.
Please see the applicable fund’s offering materials for further information regarding fees. Please
see Item 6 below for more information on performance fees. Please see Item 12 of this brochure
for more information on brokerage.
Other Fees at the Asset Level: The Firm may invest your account in pooled investment vehicles
(such as mutual funds) that themselves bear advisory fees and operational expenses such as
transfer agent, distribution, shareholder servicing, networking, and recordkeeping fees. Your
account will indirectly bear these fees and expenses as an investor in such pooled investment
vehicles and, as a result, you will bear higher expenses than if you invested directly in the
securities held by the pooled investment vehicle.
Sub-Advisory Services:
When acting as a sub-adviser, the Firm will typically receive as compensation on a cost-plus
basis or a portion of the fee earned by the primary adviser. The fee earned by the primary adviser
may be paid in the form of a base management fee as a percentage of a fund’s or account’s net
asset value.
Non-U.S. Distribution Services
For the distribution and promotion services the Firm provides in connection with the offer and
sale of sponsored or affiliated non-U.S. pooled investment vehicles, the Firm’s affiliates
responsible for managing such investment vehicles may pay the Firm a portion of the
management fee paid to them by the investment vehicles in the form of a distribution fee.
Certain of our employees receive as compensation a portion of this distribution fee.
Additionally, employees of our affiliates accept compensation (also referred to as
“commissions”) for the sale of securities, private funds, mutual funds or other investment
products. Accepting compensation for the distribution of shares of pooled investment vehicles
gives rise to a conflict of interest in that it may give our Firm and our employees an incentive to
recommend investment products based on the compensation we will receive, rather than solely
on a client’s needs. Accepting commissions for the sale of securities, private funds, mutual
funds or other investment products may give employees of our affiliates an incentive to
recommend investment products based on the compensation they will receive, rather than solely
on a client’s investment needs.
Item 6. Performance Fees and Side-by-Side Management
Advisers are subject to certain fiduciary standards under federal law and owe clients an
affirmative duty of utmost good faith to act solely in the best interests of the client and to make
full and fair disclosure of all material facts, particularly where the adviser’s interests may
conflict with the client’s best interest. In this section, we describe our performance-based fee
arrangements and our side-by-side management activities and the inherent conflicts in such
arrangements.
We currently do not but may enter into performance-based fee arrangements with certain of our
clients and for certain of the portfolios as permitted by applicable law. These arrangements
would provide for an asset-based management fee based on the market value of the client
account or portfolio at specified month or quarter ends, plus a performance fee based on the
client account’s or portfolio’s gross or net return in excess of a specified benchmark during a
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